THOMAS C. WRIGHT
PO Box 385
Hessel, Michigan 49745
Twrigh@up.net
June 28, 2001
Mr. Michael Patterson
Director of Communications, MHC
Mpatterson@mhc.gov
Millennial Housing Commission Comments
The Millennial Housing Commission faces the formidable task of evaluating the current housing delivery system and making recommendations that will set the tone for the future of housing in rural America. The Department of Housing and Urban Development appears to be the likely target of this commission. However, any attempt to decentralize federal assistance by increasing the role of state and local housing finance agencies could have the unintended consequence of further eroding the impact of the dollars in rural localities.
As an advocate of community based housing initiatives, I believe it is important to clearly define the guidelines for participation before handing federal dollars to state and local agencies. For example: In many states, the HFA takes the position that tribal communities are not eligible for HUD passthrough dollars from state administer programs because tribes have direct access to federal housing assistance via NAHASDA appropriations from Congress.
This policy discriminates against Native people by virtue of the fact it restricts access to federal dollars based on ethnicity. This policy deficiency limits the availability of federal assistance to Native Americans and undermines ongoing revitalization efforts in many small communities. The policies of the HFA are often clouded by political agendas and external factors i.e., compact negotiation for casinos. The mission of a HFA is to administer federal dollars in a manner that best serves the needs of target constituents.
Recommendation
Under the existing system, when states receive their funding from HUD, a disproportionate share of the money will go to serve the needs of heavily populated urban centers. Extensive research should be done on State Housing Finance Agencies and their historical impact on small rural communities before any thought can be given to increasing their role in the affordable housing equation.
There should be greater emphasis on home ownership in rural communities where ownership levels are low. Outreach efforts must begin with education designed to heighten awareness of federally sponsored lending programs and the availability of down payment assistance for low and moderate income families. Tribal Housing Authorities/Departments and local community
Housing Agencies are the likely vehicles to spearhead this activity. To enhance the impact of

the education process, it would be a logical progression to encourage these entities to become correspondent lenders. This proposition would increase access to some of the federally sponsored lending products that are not always readily available through community banks.
Mortgage financing could be part of a comprehensive home ownership and credit-counseling program that would culminate with client receiving a mortgage through the sponsor organization. An important component of this process involves educating the entire community about the benefits of affordable home ownership. The pervasive existence of the
Not-In-My-Backyard attitude often derails proposals of this nature.
The economic news coming out of Washington underscores a fundamental problem in
America. The disparity in home ownership rates among minorities and lower incomes families’ highlights the delicate nature of the stock market propelled economic expansion of the 90’s. Rural America and many low-income households are perplexed by the news of recessionary concerns that make headlines with regularity. To them, the longest period of economic expansion in history was nothing more than increased liquidity among higher wage earners. Whether it is a direct result of NAFTA or a dramatic shift within the employment base nationally, rural America has seen deterioration in job quality over the last decade.
Small industrial operations have closed down as the manufacturing sector consolidates and/or moves abroad. Service sector positions have served as adequate interim sources of income, but offer little long-term potential as sustainable employment. The inflation adjusted wage increases over the past decade barely exceed the inflation rates (by approximately 1 percent), and thus have not kept pace with the costs for entry-level housing. Under employment has reach epidemic levels. Income and debt as a percentage of discretionary income are becoming a major obstacle to home ownership.
Compounding the problem in many small towns is the increase in real estate activity driven by an influx of urban dwellers seeking a piece of tranquility. Unfortunately, this type of market activity further exasperates working class people attempting to locate affordable housing within their communities. The shortage of affordable housing is not unique to rural
America or Indian Country. The problem can be traced to the changing demographics that are driving the real estate markets. During the nineties industry analysts misread the changing demand side of the housing equation. Large homebuilders were advised to build with caution in anticipation of increased supply as a result of baby boomers seeking greater liquidity going into retirement. Divorce rates expanded the universe of buyers with a jump in single parent households. The 2000 Census data indicated that large numbers of immigrants from China,
India, Mexico, and the former Soviet Union have contributed to the strong housing demand.
Recommendation
Home ownership should be the primary focal point of a domestic economic agenda that places a premium on job creation for the in rural communities and for the urban poor. While it is not prudent to become protectionist in nature, we need to proceed on a course that places greater importance on our citizen. Quality of life begins at home. By fostering an environment wherein more families are positioned to make the decision as to whether home ownership is right for them rather than remaining rents by default; the country will benefit from a

resurgence of pride. It is a well-documented fact that home ownership stimulates civic pride through commitment. Increasing the home ownership rate among minorities should not be viewed as a social responsible initiative. It is a means to invest in America. The presidential election delays highlight a feeling of disenfranchisement among many Americans.
Sociologists suggest, when people feel as though their concerns are not being validated attitudes deteriorate. We need to find issues that unite Americans; housing and jobs are a good starting point. Keep in mind, it is impossible to co-exist with equality when access to credit is not readily available to everyone based on consistently applied terms and conditions.
When the President’s budget zeroed out HUD’s Rural Housing and Economic Development
Grant, the administration sent a tough message to communities that rely on this valuable program. Self-sufficiency, self-determination, and self-reliance are all terms used to describe the goals for Native American and rural stimulus initiatives. The sustainability of these programs is often doubtful before the individual projects reach their final planning stages because the funding levels are inadequate. America has experienced urban renewal I, II, and
III. When does the rural renaissance series begin?
For example: Look to the census data for demographic statistics for Native Americans. Indian
Country continues to lag behind the rest of the country in economic development and home ownership rates. How can the budgetary process identify education, healthcare, and home ownership as major emphasis without increasing the appropriations for Native Americans?
NAHASDA is up for reauthorization. This legislation by proclamation promotes selfdetermination. Under NAHASDA, housing starts are at record levels in Indian Country.
Nonetheless, at its current funding levels NAHASDA cannot keep pace with growing needs within Native communities. States should be required to set-aside a percentage of LIHTC for
Native communities based on housing conditions and poverty statistics. The same principals should be applied to the “new markets” and “single-family tax credits” when and if they become available. The GSE’s should be required to put more money at risk by providing equity investments in affordable housing activities.
The overall outlook leaves one with the impression that our economic structure and the banking system are not advantageous for rural residents. For example:
 A working class family in a small community typically has less discretionary income because there are fewer jobs and the positions available pay less than the prevailing wages for like employment in the urban centers. The companies tend to be small and employer paid medical benefits is less likely.
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Large money center banks have acquired a high percentage of successful community financial institutions, thereby instituting new philosophies and practices that result in minimum balance fees and charges for services. These fee structures encourage cash economies, which place added burden in the form of money order expenses, and check cashing surcharges. Cash societies place undue burdens on customers, but this does not deter the ten million or so Americans who choose to live this way.
 The Community Banks that have remained independent rarely offer government mortgage programs, which often increases the rate or costs for first time home buyers.

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Less sophisticated consumers are often targets of subprime mortgages. These programs are often characterized as debt consolidation vehicles. However, in many cases the loans have little or no economic merit and ultimately create financial burdens.
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Credit card industry has gotten the blessing from regulators to raise the risk premiums charged to high-risk borrowers because of bankruptcy filings. Congress has enacted bankruptcy reform to stem the flow of bankruptcies and protect credit card issuers against abusive filings. Ultimately, credit card issuers have convinced the governing bodies to accept a higher ceiling rate environment, and increased fee structure for everyone with limited recourse for the most needy consumers. (Bankruptcy reform reopened a chapter in history that our founding fathers worked hard to end - the concept of debtors prisons.)
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The costs of goods (groceries, sundry items, building materials, etc.) are greater because of the transportation surcharges pasted through by suppliers.
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Fuel costs are typically 10-20% percent higher, which influences home heating expenses and commuting costs. With fuel emissions standards increasing, and no meaningful legislation to regulate collusion among refiners, the consumer is hostage to the oil industry.
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Education dollars are a byproduct of population and therefore, rural school districts typically lag behind wealth urban school systems.
Although Indian Country faces all of the same issues, the situation is further compounded by sovereign immunity and trust land status. Financial institutions are void of knowledge about tribal court systems and sovereignty. Financial literacy is a two-way street. Tribal communities are developing and implementing financial literacy programs for their members.
With assistance from Congress, and the Department of the Interior, the BIA can be given directives to carryout their Trust responsibilities in manner consistent with their fiduciary obligations. It is difficult for Banks to embrace the opportunities in Indian Country without reforming BIA policies. The Area Offices tend to operate autonomously from Washington.
This random fracturing of policy creates a chaotic environment for financial institutions with tribal relationships in multiple states. This becomes a major housing issue when we recognize that the BIA must record the leasehold interest and mortgage documents to perfect a lien.
The message is clear. Home ownership and equal opportunity education must be priorities for
America to move forward in a positive manner. No one in America should feel the pain of disenfranchised caused by unequal access or treatment. When we improve the quality of life for the least privileged segments of the population, we enrich the entirety of humanity.